Oxford is one of many leading universities to have spent heavily on improving access only for the gulf between rich and poor to widen. Photograph: Joe Cornish/Getty

Bright children from the poorest homes are seven times less likely to go to top universities than their wealthier peers, partly because their schools do not offer the "right" subjects, a government-commissioned review will say today.

The university access watchdog, the Office for Fair Access (Offa), was asked by Gordon Brown's government to assess what more could be done to boost the number of disadvantaged teenagers studying in Britain's elite institutions.

Research commissioned by the watchdog revealed that teenagers from the 20% most advantaged homes in England were seven times more likely to get a place at the most selective universities than those in the poorest 40%.

The gulf has widened from 15 years ago, when the richest were six times more likely to get a place in the top third of universities, despite Oxford, Cambridge and other leading institutions spending, on average, £45m each year on widening access.

Offa reports that up to 4,000 pupils decide not to apply for top universities despite achieving high enough grades. Thousands of others are disadvantaged because their schools do not offer the subjects that elite universities want, such as modern foreign languages or single sciences, the review says. The UK's ambitions for a globally competitive economy and equitable society "will simply not materialise" unless clever young people from poor homes are given better access to top universities, the report says.

It urges universities, schools and colleges to start picking out bright children from disadvantaged backgrounds and coaching them – at the very latest by the age of 14, it says. The government should also evaluate schools according to which universities their pupils go to, to add momentum to the drive to improve aspirations, the review recommends.

Students are sometimes influenced by a lack of good advice, and some teachers confuse excellence with elitism, it adds.

Martin Harris, Offa's director, said youngsters from disadvantaged homes were "disproportionately not applying to selective universities and so reducing their chances of upward social mobility".

The review recommends that universities employ extra staff to advise the brightest teenagers on subject and degree choices in the most disadvantaged schools. Universities should urgently review their bursaries and consider diverting cash into summer schemes and open days.

"A university may decide that a well-targeted summer school costing around £500 per head … is better value for money ... than a loosely targeted, or untargeted, bursary or scholarship worth £500 per year of study, but with unclear results," the review states.

Universities said they already make "strenuous efforts" to select students according to intellectual potential. "We cannot admit people who are not applying," said Steve Smith, a professor and president of Universities UK, the umbrella group for vice-chancellors.

The review suggests if tuition fees rise and students have to pay more for their courses, universities should be made to spend some of the income on ensuring fair access. Some universities are lobbying to set their own charges for particular courses.

But the University and College Union, said if students were charged more "the richest will pick whatever course they like with the rest left to fight it out for anything within budget, or be put off completely".